Private pensions boost retirees’ income

Private pensions helped retirees’ income nearly triple in real terms in the last 40 years, according to official statistics.

Figures from the Office for National Statistics (ONS) show the annual disposable income for a pensioner household reached £29,000 in 2016.

This was a significant jump from 1977, where only 21% had disposable income over £10,500.

Furthermore, 80% of retired households received income from a private pension last year, compared to only 45% who received income from a private pension in 1977.

The ONS said disposable income of pensioners grew on average by 2.8% a year in real terms since 1977, compared to 2.1% in non-retired households.

Those with a private pension in 2016 received average income that was 14 times higher (£19,000) than those who did not receive income from a private pension (£1,300).

Including cash benefits, such as the state pension, disposable income of individuals with a private pension last year was on average 1.6 times higher than those without a private pension – at £27,800 and £17,200, respectively.

Steve Cameron, pensions director at Aegon, said:

“Pensioners in the UK have never been better off financially than they are today.

"In the last 40 years, the average pensioner has catapulted out of the lowest income bands, and has even begun to close the gap on average incomes received by the working population."